FIDIC Contracts

in use in
International
Projects

Contract Management from the Contractors

Perspective
Ben Edwards
Kier Construction

FIDIC Contracts
in use in
International
Projects

The Rainbow Suite

Red
Yellow
Silver
Green
Pink
Gold
Blue
White

FIDIC contracts are internationally accepted

The standard form is a starting point it is important to
draft the appendix to tender and particular conditions to
reflect the full agreement between the parties.
Clauses are general in nature
This allows contracts to be agreed quickly but parties
have to be diligent that all issues are considered in
order to avoid potential for disputes
Front end investment can avoid back end dispute costs
Get the right balance Employer Bias v Contractor Bias
Select the Appropriate Form
Understand the differences between the forms
Follow the Contract

FIDIC Contracts
in use in
International
Projects
The Current Suite:
A completely new set of contracts was
released by FIDIC in 1999:

The 1999 Red Book (first edition)

The 1999 Yellow Book (first edition)
Silver Book
Green Book

 FIDIC has reduced the number of clauses in all

of the recent contracts. The Orange Book
contained 20 clauses, as now do the Red,
Yellow and Silver Books. Previously, the Red
Book had 72 clauses.
FIDIC has also standardised the terms across
the full suite so that wherever possible the
same words and definitions have the same
meanings and the clauses are now grouped in
a logical manner across all the contracts.
Knowledge of one form of FIDIC conditions is
therefore of immediate benefit in respect of
other forms.

The 1999 RED Book (first edition)

- Conditions of Contract for Construction for
Building and Engineering Works Designed by
the Employer
- Traditional contract
- Re-measurable (option for lump sum)

The 1999 Yellow Book (first edition)

- Conditions of Contract for Plant and Design
Build for Electrical and Mechanical Plant, and
For Building and Engineering Works, Designed
by the Contractor
- Design and Build, Lump sum
- Suitable for all types of works
- Replaced both the original Yellow Book and the
Orange Book (Design Build & Turnkey)

Silver Book 1999

Conditions of Contract for EPC/Turnkey
Projects
- Design and build
- Lump Sum
The Green Book
Short Form of Contract
Recommended for engineering and building work
of:
- small capital value and/or
- simple or repetitive work and /or
- short duration

Pink Book
The Multilateral Development Bank Construction Contract
(The Red Book For Development Bank financed projects)
Features provisions on:
- Corruption
- Social utility
- Loan facility

Blue Book
-

Dredging and Reclamation Works

White Book
-

Consultancy Agreement

Gold Book
-

Design, Build, Operate

FIDIC Contracts
currently in use
by Kier in
Jamaica

Focus Today: Red, Yellow and Silver Books

Red Book is used for traditional procurement
Yellow and Silver Books are Lump Sum Design & Build
forms of contract
Silver Book was created in response to the needs of
private financing for infrastructure projects:
- Little or no risk to the Employer of price increase if there
are unforeseen risks
- Turnkey
- Contractor under much greater design risk and burden of
ground conditions risk under Silver Book

Main Differences between Red, Yellow and Silver

Books
- Structure
- Role of the Engineer / Employer
- Design Responsibilities
- Site Conditions & Adverse Physical Conditions
- Taking Over Parts of the Works

Major feature of any international construction contract is the allocation

of risks & liabilities
Contractors General Obligations
Clause 4.1 of the Red Book:
- Design (to the extent specified in the contract), execute & complete
the Works in accordance with Engineers instructions
Clause 4.1 of the Yellow and Silver Books (same obligation):
- Design, execute & complete the Works
- Required to comply with Employers Requirements
Design Risk
Fitness for purpose
Under Red Book, the Contractor is responsible for any
part he designs being fit for purpose
Under Silver Book, risk of the adequacy of the Employers
Requirements as well as the Contractors own design is the Contractors
responsibility
Under the Yellow Book, risk of the adequacy of the Employers
Requirements is only the Contractors responsibility to the extent that
an experienced contractor would have discovered error

FIDIC Contracts
in use in
International
Projects
In all FIDIC Forms the giving of Notices and
further updates by the Contractor is extremely
important
Time-bar issues
Claims should not be ignored financial and
/or time
Prescribed time in Contract for responding to
claims

Express Provisions for Additional Cost (+ Profit)

Heading

Clause

Red

Yellow

Silver

Delayed Drawings or
Instructions

1.9

Y+

Errors in Employers
Requirements

1.9

Y+

Rights of Access

2.1

Y+

Y+

Y+

4.6 / 13.3

Y+

Y+

Y+

4.7

Y+

Y+

Unforseeable Physical
Conditions

4.12

Fossils

4.24

Testing

7.4

Y+

Y+

Y+

13.3

Y+

Y+

Co-operation
Setting-Out

Variations

Express Provisions for Additional Cost (+ Profit)

Heading
Adverse
Weather

Clause

Red

Yellow

Silver

8.4 (c )

Unforseeable
shortages in
personnel or
goods due to
the
Government

8.4 (d)

8.4 (e) r&Y

8.5

8.9

16.1

Y+

Y+

Y+

Delay,
prevention due
to Employer
Delay by
Authorities
Suspension
instructed by
CA
Suspension by
Contractor

Express Provisions for Additional Cost (+ Profit)

Heading
Clause
Delayed Tests &
Interference
due to the
Employer
9.2 / 10.2

Red

Yellow

Silver

Y+

Y+

Y+

Changes in Law

13.7

Employers Risks

17.4

Y/Y+

Y/Y+

Force Majeure

19.4

Limitations of Liability
Clause 17.6 of the Red, Yellow and Silver Books (similar
obligations):
Joint exclusion of:
- Loss of use of any Works, loss of profit, loss of any
contract or for any indirect or consequential loss or
damage (does not apply payments on termination and
does not apply to indemnities); and
Contract Sum Cap on Contractor liability (does not
apply to indemnities or other listed items, which include
intellectual property rights)
No limitation in case of:
Fraud
Deliberate default
Reckless misconduct

Common amendments to Limitations of

Liability
Employer Bias
Removal of standard Clause and replacement with only
a full exclusion of liability for the Employer for
consequential loss
Contractor Bias
Widening of joint exclusion of loss of profits,
consequential loss etc
Widening of the Contract Sum cap to include
indemnities and a cap on delay damages
Introduction of a time limitation limiting the number of
years after the Taking Over Certificate that the
Contractor is liable

Time for completion

The Contractor is required to complete the

Works by the Time for Completion which is
set out at Clause 8.2 of the Red, Yellow and
Silver Books
This requires:
Passing the Tests on Completion
Completing all work stated as being required
by the Contract to be complete for the
purpose of taking-over the Works under
Clause 10.1

Extension of time for completion

The Time for Completion may be extended under Clause
8.4, provided that procedure under Clause 20.1 (claims) is
followed.
Extensions of time are important to both Contractor and
Employer
Allows the Contractor more time to complete and avoids the
imposition of liquidated damages. Allows the Client to plan
properly Taking Over.
In general, under English law, where the Employer prevents
the works being carried out time must be able to be extended
in order to preserve the Employers right to liquidated
damages
All forms place responsibility on the Contractor to issue
Notices and regular updates of any events which may impact
upon the Time for Completion. Dont be offended when the
Contractor follows the requirements imposed upon him under
the Contract!

Extension of Time for Completion

Defined Causes at Clause 8.4
There are more defined causes for extension of time under the
Red and Yellow Books than under the Silver Book
Defined causes under all Books, Clause 8.4:
A Variation
A Cause of Delay giving an entitlement to extension of time
under a Sub-Clause of the Conditions (see following table)
Any delay, impediment or prevention caused by or
attributable to the Employer, the Employers Personnel, or the
Employers other contractors on the Site
Additional defined causes under the Red and Yellow Book:
- exceptionally adverse climatic conditions;
- unforeseeable shortages in the availability of personnel or
Goods caused by epidemic or governmental actions;
Contractor Bias amendment:
Add the following cause:
- any other circumstance for which the Contractor is not
responsible under this Contract.

EOT Claims
Clause 20.1 EOT claims by Contractor
Notice to be given by the Contractor within 28 days of
the Contractor becoming aware or when it should have
become aware of the event
Condition precedent to entitlement to an extension of
time:
If the Contractor fails to give notice of a claim within
such period of 28 days, the Time for Completion shall
not be extended, and the Contractor shall not be
entitled to additional payment, and the Employer shall
be discharged from all liability in connection with the
claim.
Contractor bias amendment:
- Remove condition precedent

Express Provisions for an Extension of Time

Heading
Errors in
Employer's
Requirements
Right of Access
Co-operation

Clause

Red

Yellow

Silver

1.9

2.1

4.6/8.4(a)

Setting Out
Unforeseeable
Physical
Conditions

4.7

4.12

Fossils

4.24

Testing

7.4

Variations

8.4(a)

Adverse Weather

8.4(c )

Express Provisions for an Extension of Time

Heading
Unforseeable
shortages in
personnel or
goods due to
Government
Delay,
prevention due
to Employer
Delay by
Authorities
Suspension
Delayed tests &
Interference due
to Employer

Clause

Red

Yellow

Silver

8.4 (d)

8.4 (e) r&y 8.4

(c ) s

8.5

8.9 / 16.1

9.2 / 10.2

Changes in Law
Consequences of
Employers Risks

13.7

17.4

Force Majeure

19.4

Liquidated Damages
Clause 8.7 Delay Damages
Amount stated in Contract Particulars / Appendix to
Tender
Delay Damages apply per day from the Time for
Completion (as may be extended) until the date stated
in the Taking Over Certificate
Possible for parties to cap the amount of Delay
Damages
Exclusive remedy for the Employer for Contractor
delay, except:
- in the event of termination, where the Employer may
be able to recover additional costs
- where the Contractor is required to accelerate the
Works under clause 8.6 for being too slow or having
failed to comply with the Programme

Claims
Red and Yellow Books have the same claims
provisions.
Silver Book is slightly different, with the only
real difference being the involvement or not of
the Engineer
For all claims, notices must follow the required
formalities at Clause 1.3:
In writing
Delivered by hand, sent by mail or courier or
any agreed systems of electronic transmission
Delivered to address set out in the Contract
(unless subsequently advised of a different
address)

Claims
Clause 2.5
Contractor bias amendment:
If the Employer fails to give notice of a claim within
such period of 15 Business Days after the Employer
became aware, or ought reasonably to suspect, or
ought reasonably to have become aware, or should
have become aware of the event or circumstance giving
rise to the claim, then the Employer shall not be entitled
to any amount, payment or extension whatsoever from
the Contractor in respect of such claim and the
Contractor shall be discharged from all liability in
connection with such claim

Golden Rules
- Beware enter in haste, repent at leisure
- Be sure you are in agreement before you
enter the Agreement
- The Contract requires the Contractor to issue
Notices or Time-bars him dont let emotions
cloud the need to issue or receive Notices.

END OF PRESENTATION